22 October 2021 11:58 AM

Fitch praises CBE's 300bp interest-rate cut as 'bold' move amid coronavirus ramifications

Saturday، 21 March 2020 - 12:14 PM

Fitch Ratings hailed Friday 20/03/2020 the Central Bank of Egypt’s (CBE) decision to cut interest rates by 300 basis points (3%), describing the move as "bold" to contain the ramifications of novel coronavirus outbreak on the economy.

The world economy has been badly suffering from the outbreak of COVID-19, disrupting the global supply chain.

In its recent report, the leading ratings agency said the size of the cut was ahead of its expectations for the overall interest rates cut in 2020, making it the sizable stimulus measure for the Egyptian economy.

Such historic interest rates cut should spur the household consumption, and push forward the private sector investment cycle, which is expected to offset the headwinds ensued from the global economy weakness, it added.

It is a proactive measure, aiming at supporting the Egyptian economy amid the current global challenges, due to the spread of coronavirus, Fitch added.

Fitch sees that the current global headwinds could pose risks to Egypt’s non-oil exports and the number of ships transiting Suez Canal, together make up 7.2 percent of the country’s GDP.

"CBE move could alleviate such risks," it expected.

Egypt’s Real GDP growth is expected to reach 5.4% during the fiscal year 2019-2020, Fitch expected, to be accelerated to 5.8% in 2020-2021.

MENA

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